The Supreme Court's 2018 decision in South Dakota v. Wayfair removed the settled physical presence requirement for state taxation of out-of- state businesses. This kept states from taxing remote-and often small sellers who had no stores, no warehouses, and no other connection to the state other than its sales to the state's citizens. Because the Court has done away with the requirement that businesses be physically located within a state before they can be taxed, states may now impose sales and use taxes on businesses whose only link to the state are predominately online transactions. Big companies like Amazon will no longer be able to hide behind a large online presence to avoid state sales and use taxes, but the real consequence of the decision lies with the underdogs: these taxes will impact small sellers disproportionately hard, as they must now navigate the copious amounts of taxing regulations across the country.
The Wayfair decision will mean confronting new issues in the near future. Its retreat to a substantial nexus requirement remains more ambiguous than ever in an online era and will result in an erosion of the Dormant Commerce Clause. The solution now lies with our democratic process. If the Court does not overturn Wayfair and we do not amend the Constitution-solutions which, though not impossible, are improbable-the responsibility falls on state citizens to ensure that out-of-state businesses are not unduly taxed. This Comment examines the Wayfair decision in light of the Dormant Commerce Clause's history and purpose and argues that the physical presence rule was wrongly overturned, a decision only we can now correct.
Jessica Inscore, The Amazon Argument: An Examination of South Dakota v. Wayfair and a Discussion of its Implications, 41 Campbell L. Rev. 531 (2019).